Super & Early Retirement

Because most people don't seem to appreciate the implications.

 

... or are under the false impression that 9.5% of SFA will grow into $$$ if they don't pay any attention to it.

 

Exactly - the implications. Education should consist of:
- scenario analysis of different income bands and the expected lifestyle with each
- the impact of fees on long term performance
- risk management - asset classes, diversification, volatility, ways to lower risk.
- being responsible for having some sort of plan to achieve super performance
- the most important rules and regulations that impact super performance
- different options for managing super with pros and cons

I should probably write a blog called "not licensed to give advice: the cheapest and best not-advice available on Super"

 

Agree. The issue is, super is supposed to take pressure of the tax payer. If people are not informed and super is underutilized than what's the point.

 

Most of that is already covered by those "compare the pair" industry super fund ads. And the PDS of each fund clearly outlines the risks of each asset class.
A few of the problems are:
1) the compare the pair ads, normally show the final figures equating to something like $130,000, which is probably the average for most Australians, but clearly not enough to live out your days on.
2) leading off 1), it'd be foolish to highlight this shortfall in the same ad, swaying the general public to take more risky assets, or giving up on super entirely.
3) MOST Aussies fall into the trap of sticking with whatever the HR officer signs you up to in your first retail/other job (Hesta, Rest, etc). And a lot even end up with multiple accounts, not thinking about why that's a bad thing.
At least there's honest people like Scott Pape who try to reach out to the Aussie battlers to get them on the right path to sorting out their futures.
4) some the points above would be financial advice, and that's why you don't see it in adverts or in schools.

 

With $130k, that equates to a top-up on the pension of say $10k/yr from age 67 to 80. Multiply X 2 for a couple and they'd have $40-50k income. Reasonably comfortable if they own a ppor.

 

Nah. A spur of the moment decision to have some debauched time at Ulladulla - age shall not weary them.

Sadly, no Gin of my preference could be located but a lovely dinner with an inexpensive but noice vino. Life's good.

Big Phew! on the way back though. Close to needing a replacement car when it and a Roo were considering having a love affair near Tarago.

Strikes a chord (not a Bdim7). I acknowledge it's probably different in today's environment where people may be more switched on although under the pump with the level of debt but I occasionally wondered what couples or individuals of my vintage did with the money once they had paid off the mortgage.

I kept to myself as to what I did as, first, it was none of their business and, second, I had no wish to justify my actions to others. Of course, the reverse also applied. However, from conversations you generally hear in offices, I suspect they simply spent it.

While it's understandable to some degree, it's also odd in a way. By all means ease up a bit but when you think about it, if you've coped while paying a mortgage, been able to pay your bills eat and all the usual things, why not put a portion towards investing either through super or other preferred investments? I kept silent because people could easily be offended by my views. No one likes being seen as rude. Nevertheless, it was difficult for me to understand why it didn't cross their minds.

Same with paying for childcare. I have heard how hard it is and no way would I disagree with that but it is finite. If you have successfully got through it for each child why a portion isn't allocated as per the paragraph above doesn't seem wise to me. But that's me. Others have a different attitude.

Then again I suppose we did some things which would have seemed silly to others such as putting any Medicare rebates or tax refunds if we got one towards investing. Didn't need those on a day-to-day basis so viewed them as a sort of windfall.

Yet I guess it does depend on your level of income and how wrung out you are. Not everyone is fortunate in that regard but for those who are, gee, I feel they waste some opportunities. Little amounts can definitely add up over time.

 

For my parents, their excess money went into raising me and my bro, Catholic school education, OS trips every few years, and not much else. I suspect a lot was donate to Santa each year. They were average middle class workers, though, and certainly didn't have the insight to invest in shares, other than an NRMA offering which I'm sure a lot of parents are still holding onto.

 

I guess you've describe standard fare @ShireBoy. Always the way. If there is no spark about possibilities, whatever those possibilities may be, it won't happen. No shame about that of course. It's how your brain is wired I suppose and we're all different. I see that in my brood.

 

I’m glad you took the nurse with you as you can’t be too careful at your age. Then again maybe it was a threesome:



And I hope you gave the ladies a:

“YOU’VE ALL DONE VERY WELL”

 

Yep, but I realise we've off on a tangent from the OP of this thread.
We're part of a special club now, and aiming for knowledge to help us reach that goal of early retirement.

 

Getting back on track ever so slightly, an article from one author I occasionally read but that about it. No idea where you could put the money from day one.

What if someone invested $2.83 a day for you since birth?

 

I remember that spiel. Was neva eva going to happen.

Same with adjustment to personal tax rates following the introduction of the GST. We quickly concluded we would have had to spend a huge amount to attract about $60k pa of GST. That was neva eva going to happen - and it didn't - so we flung the additional funds to super. Zero change to our then lifestyle.

 

@Rolf Latham - yes it was going to be matched contributions and that's all been eroded.

 

Article about lack of knowledge about Superannuation The $100,000 mistake young people are making

It reminds me that I need to educate my kids about Superannuation and get them to setup a low fee fund if they start part time work.

 

This sounds better than it is:-
The fare to take that train journey is just $2.83 a day ($1000 a year) provided the parents start immediately: the pay-off is that the child could have $3.8 million at age 65, which is the end of the journey. The figures are based on the assumption that the money is invested in quality share trusts, and that these trusts earn an average of 9 per cent a year if all income is re-invested.

In todays $$ $3.8 mil is lovely but 65 years ago you have had to be VERY rich to have $1000 a year to spare. Eg 55 years ago my mum's house was $4000 pounds.
If you invested $1000 a year now it's not going to break the bank but what will $3.8 mill get you? Not a good retirement that's for sure.

 

Does anyone know if you borrow money (say from a Line of Credit) to use the loan funds as a non concessional contribution within super, would those loan costs be tax deductible? I'm 66, working part-time, meet the work test, and also receive a pension from an industry fund. I'm trying to increase my super balance which was decimated in a family law settlement. At some time in the future, I stand to inherit some funds which I want to place within super. However, as each 30 June passes, I miss the opportunity to have placed up to $100,000 as a non concessional contribution in super. I have been thinking that borrowing funds via a line of credit and placing those funds into a super pension account might be a solution. The borrowed funds would be used as a deposit to a pension fund that I would then draw down at the minimum 5% pension. This 5% pension payment would currently cover the actual borrowing costs of the Line of Credit which would be less than 5%. Hopefully the invested funds would earn more than the 5% so would grow in a tax free environment. Any thoughts or suggestions?

 

Not deductible.

 

Thanks @Terry_w it was just a thought.